Costly self-insurance of rights offerings

• Main Authors: DUONG, Truong Xuan, SINGH, Rajdeep, TAN, Eng Joo
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2015
• Subjects: rights; paradox;failure; seasoned equity offerings; Corporate Finance
• Online Access: https://ink.library.smu.edu.sg/lkcsb_research/5314
• Institution: Singapore Management University

We study how the underwriting decision of an equity rights offering is affected by the risk of offering failure. Firms can reduce failure risk by getting underwriting or by self-insuring through subscription price discounts and subscription precommitments. Self-insurance is generally regarded to be...